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Contributed by HR Committee
Change is constant. Sounds like an oxymoron, yet change is now woven into the fabric of daily life to the point that we do not always recognize that change is occurring.To discount the need for change in today’s business climate is to limit the growth and success of the enterprise. More than ever, businesses need to plan strategically for change. This is especially critical in the development of an integrated talent management strategy. Businesses need to identify successors for pivotal or mission critical positions that drive the successful execution of an organization’s
business strategy. The promise of constant change creates the need for succession
management as a key strategic driver.
Current demographic trends support the need for organizations to develop
succession strategies and tactics. Consider the following:
- One-fifth
of America's large established companies have lost 40% or more
of their top level talent over the past five years. The
replacement pool of 35 to 44 year olds has declined by 15%.
Source: Development Dimensions International and U.S. Bureau of
Labor Statistics
- A
serious shortage of skilled workers began in 2005 and will grow
to 5.3 million by 2010, and to 14 million by 2015. Source:
Perfect Labor Storm.com
- Over
the next 5 to 10 years, 18 million jobs will require individuals
with bachelor degrees. At the current level of college
graduations, a shortfall of 6 million individuals with bachelor
degrees will exist. Source: Employment Policy Foundation
- Companies
reacting to their succession problems by recruiting from the
competition show a 66% failure rate for senior managers hired
from other companies within the first 18 months. Such a failure
costs the company 20 times the salary of the executive. Source:
Center for Creative Leadership
Scary statistics. If even half of these trends accurately predict the future, businesses are
already facing serious, even critical, talent issues. What can organizations do to ensure they have the right
talent in the right roles at the right time?
Business environments are becoming increasingly complex, driven by economics,
changes in organization structures, more dynamic labor markets,
increased competition and corporate governance concerns. The pressure on leadership to identify their next generation
of leaders is immense. In
addition to “build vs. buy” product and service decisions,
executives are now also faced with “groom internally vs. hire from
the outside” talent decisions.
Many organizations have developed replacement plans for key positions,
but these plans fall short of addressing the need for a more
comprehensive succession strategy and approach to identifying
talent, assessing readiness and deploying successor development
initiatives. A comprehensive talent management process includes aligning and
integrating a variety of activities to strategic organizational
needs. Among these activities are the need to identify pivotal or critical positions,
assess skills and behavioral requirements for key positions,
establish eligibility and selection criteria for formal succession
programs, provide a framework for identifying, sizing and closing
skill and leadership gaps, and developing strategies to retain key
talent.
In his book Effective Succession
Planning: Ensuring
Leadership Continuity and Building Talent from Within, William Rothwell identifies eleven best practices for productive succession
planning and management:
- Clarify the purpose and the desired results of the effort - clarify why the
program exists and what results you seek from it, align your goals for the program with business needs, and take a hands-on
approach to formulating, implementing, and evaluating the program.
- Determine what performance is required now - use competency modeling to
discover the differences between the best performers and average performers.
- Measure performance - use your competency model and measure work results to help pinpoint and eliminate organizational barriers that impede productivity, and to identify areas for feedback.
- Determine what performance is needed in the future - establish a future competencies model that describes the characteristics of individuals who will be aligned with organizational strategies
and objectives for the long term.
- Assess potential - compare individuals to the future competency models e.g. use 360 degree feedback and assessment centers.
- Establish a means to narrow gaps - establish the gaps between an individual's current competencies and performance and between his/her potential, use individual development plans, in-house leadership development programs, on and off-the-job work
assignments and education events, action learning, projects,
task force participation, and mentoring to build individual
competencies to meet present challenges and to prepare for
future ones.
- Follow up -
establish a regular follow up system e.g. quarterly 'talent
review' meetings to hold both individuals and immediate
supervisors responsible for implementing individual development
plans.
- Document
competence - keep a record of the work-related and
company-specific competencies of key staff in the organization.
This inventory can be used in times of crisis or short notice to
field the right team of people for the event.
- Create and
sustain rewards for developing people - reward both those
individuals who are making progress in their development and
those who are 'growing talent' in line with organizational
needs.
- Evaluate
results - although few organizations determine their return on
investment of such program in a quantitative way, the
availability of staff with key skills for vacancies may be a
measure of a program’s success.
- Lead from the
front - the CEO and other senior leaders should take a hands-on
approach and become personally involved in the program and not
delegate it to the Human Resource Department.
Deploying a succession management program is no easy task. In order for a succession management program to succeed, an
organization must have a strategic plan in place, must have
commitment from top leadership and must have the financial and
people resources available to provide development opportunities to
groom successors into pivotal roles. A robust talent management infrastructure must be in place
where sourcing, recruiting, hiring, onboarding, development and
retention best practices are carefully integrated and aligned with
competencies.
In a recent survey conducted by RHI Management
Resources, executives from the USA’s 1000 largest companies were asked “How valuable is it for a
manager to identify and groom a successor to his/her position?”. Eighty percent of the respondents replied “very
valuable”. Zero replied “not at all valuable”. There is significant value in having performance
proven, “ready now” talent that can step into a role in an
organization they already know and understand both culturally and
operationally. There’s no question the benefits of having a
succession management program are worth the effort and investment. So, perhaps the best question for organizations to ask when
considering implementing a succession management program is “can
we afford not to?”
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